Getting a show off the ground takes vision – and a village. Our experts will guide individuals like you through the complex yet rewarding process.
How does an investor make money?
By law, every week that the show makes a profit after its official opening, 100% is paid to its investors until they have recouped their initial/original investment. (Profit is determined after all operating costs are paid.) Most GM’s (general managers) of production companies send checks on a quarterly basis for efficiency of time and accounting costs. Once the show has fully recouped to its investors, net profits are usually split 50/50 between the producers (lead and co-producers) and the initial investors. Investors often share in the ancillary income from the production (merchandise, licensed productions, etc.)
Can anyone invest?
Yes. But there are strict guidelines set by the US Securities and Exchange Commission (SEC). To be an “Accredited Investor” for a Broadway production, one must meet the criteria/standards with certain financial requirements: SEC Investment Criteria. To protect one’s personal privacy, no production will require financial proof of personal banking statements, nor a confirmation of net worth. However, each contractual document requires a signature page acknowledging that one can invest as an “accredited investor.” For each tax year, the GM furnishes tax Form 1065: Schedule-K1’s to the contracted investor.
As of their August 26, 2020 press release, the SEC has amended requirements creating opportunities for investors who previously could not qualify. SEC Press Release: 08/26/20
Is there a minimum required to be an investor?
A minimum is quite common. These investments are varied in amounts. It is typical for a Broadway production to set its minimum of US $50,000. These are called “units” (in the stock market, they would be called “shares”). However, many shows accept 1/2-unit investments of US $25,000. Some first-time investors can also align with their friends to jointly cover the cost of a unit. e Productions LLC can provide a template agreement for you to share with your legal counsel to guarantee it meets your situation’s requirements.
Why do people invest in a Broadway production?
Theatre is art. Why do we invest in a piece of artwork? Because we have a special appreciation for it. We fall in love with it and often display it. We invite friends over to share it. With the purchase of art, we are limited in our ability to share it. However, a Broadway production can be seen by countless audiences, on tour, and eventually in smaller cities for local productions. It is far more reaching in sharing one’s love of it than it just being in one’s home. By doing one’s due diligence, it can also be a wise financial investment. Regardless, one will always love it. Individuals invest for a myriad of reasons: Supporting the arts and wanting to share it with the masses. Some want to meet the stars of the show, share in the opening night festivities and possibly attend the Tony Awards ceremony live, in-person each June. And some seek high-risk/high-reward investments in their personal portfolios. Most investors enjoy a combination of these reasons.
What’s the risk?
We equate this to investing in any new business (e.g. food services/restaurants, web services, consulting). Every venture can be a high-risk. But high rewards on many different levels can also be achieved, not limited to financial. Note that an investor can never lose more than he/she invests. Our advice is to only invest what one is willing to lose without negatively impacting quality of life. We also recommend due diligence in researching the production, as well as its creative and production teams. We encourage interested individuals to seek clarification from producers. Experienced producers are usually comfortable sharing information with an investor. Although some information may be confidential and cannot be shared without a signed Non-Disclosure Agreement (NDA).
Are there perks in addition to the financial reward?
Yes! Investors are invited to the opening night performance and the opening night party. Depending on the director, often a dress rehearsal can be attended prior to preview performances starting. Investors may be included in select media and cast events, too. If the show is nominated for a Tony Award, one is invited to the Tony Awards telecast, as well. In addition, investors have access to purchasing house seats to almost every performance including its tour(s). Investors are also invited to select industry-only workshops of our productions and/or presentations of works in progress. Our investors will always be the first to learn about future investment opportunities for our new involvement in productions.
How can I become a producer and be more involved?
Joining the production team as a co-producer involves a larger financial investment commitment. It also can allow better access to, and involvement in the creative process. Always remember that lead producers are like CEOs of a corporation and co-producers are like board members. In a Broadway production, it is not a democracy. Co-producers (“board members”) might have an opinion, but the final decisions are always made by the lead producer(s). For non-musical Broadway productions, co-producer entitlements often start at about US $150,000. However, entitlements for musicals usually start at a higher amount of US $300,000 (and are often more). One can invest the money themselves, raise it from investors, or a combination of these options. In addition to being credited above the title of the show in the Broadway Playbill as a producer, a co-producer is also eligible to be nominated for a Tony Award for the production (qualifying limits are governed by the Tony Awards committee). They can receive additional profit participation, participate in meetings, and often have better access to the inner workings of the production, whereas the regular investor does not.